Gorman and Co. awarded $1.5 million in state and federal tax credits to develop Wintergreen Ridge
The second phase of the Keystone workforce housing project will have 46 units
Summit County has 46 new affordable rental units in the pipeline thanks in part to Gorman and Co. and the Colorado Housing and Finance Authority.
Earlier this year, Gorman and Co. was recruited by Summit County to finish building out the 46 units it was previously approved for when it started the first phase of the Village at Wintergreen project in 2018. There was just one problem: The type of units needed in the community are some of the most difficult to build from a financial perspective.
Enter the Colorado Housing and Finance Authority, the entity that awards federal and state tax credits to for-profit and nonprofit developers of affordable housing. The entity recently announced 14 developments that would receive tax credits this year, one of which was Gorman and Co.’s Wintergreen Ridge development, the second phase of the Wintergreen complex in Keystone.
The purpose of the tax credit program is to reduce the amount of debt financing or other funding sources needed to make a development financially feasible, according a release from the authority. The organization’s allocation priorities were for developments that served homeless or special-needs populations or developments in counties with populations of less than 180,000.
Two types of federal tax credits were available, a 4% credit and a 9% credit. The Wintergreen Ridge development was awarded the 4% tax credit, which amounts to about $879,000. In addition, a state credit amounts to about $700,000.
According to the authority’s news release, developers such as Gorman will then sell the tax credits to investors to raise equity for their projects. In doing so, the debt for the project is lower, meaning rent can be reduced and more affordable.
“We know that demand for housing below 60% (of area median income) is the largest need, and it is oftentimes the hardest to develop because it costs the same for us to develop affordable housing as it does to develop any other kind of housing,” said Kimball Crangle, Colorado market president for Gorman. “These tax credits help fill financial gaps since we’re limiting the rents that we charge. We need to make up that financing gap, and that’s how tax credits make these projects feasible.”
Earlier this year, the county approached the company and said it would partner with them to finish building out the project. Summit County Housing Director Jason Dietz said the county pledged to match the state’s tax credit of around $700,000.
Dietz, who has been at the forefront of the housing conversation, said this low-income tax credit program is invaluable in providing rental units for low-income populations.
“We know from our needs assessment that there’s demand for everything right now in Summit County as far as housing goes, but lower rental rate (area median incomes) is where the biggest demand is, and the tax credits allow developers like Gorman to make it financially feasible to actually do that type of development,” Dietz said. “Without those tax credit financing systems in place, very little low (area median income) housing would probably get developed across the country let alone Summit County.”
It’s not easy getting these tax credits, though.
“Applying for low-income tax credits in the state of Colorado is a competitive process,” Crangle said. “Typically, the allocating agency, which is called the Colorado Housing and Finance Authority, for every one award they make, they typically see five applications that otherwise don’t get funded.”
To award these tax credits, the authority relies on its qualified action plan, which outlines a few criteria for approval. Some of these relate to the project’s proximity to other housing developments, market conditions, the project’s readiness and a project’s overall financial feasibility and viability.
It’s clear why Wintergreen Ridge earned some tax credits. Dietz pointed out that this second phase was largely ready to go and that one of the few barriers to the project was how it would be financed.
“Getting things developed and entitled, getting the zoning and approvals in place is a very long and complicated process,” he said. “With this parcel, Wintergreen Ridge, it already has the entitlements for those 46 units.”
While the construction timeline is still being worked out, some details about the development are already finalized. Once completed, the Wintergreen Ridge development will have 46 units and one unit for an employee. These units will be divided into 12 one bedrooms, 29 two bedrooms and five three bedrooms. All of these units will range from 30% to 60% of area median income, which is $40,380 or below for a single person.
Crangle said the new building will be up the hill slightly from the current development and that the layout might be slightly different from existing units. In general, the units will still be the same quality as the Wintergreen units that have already been built.
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